There seems to be no
letup of bad news on the Affordable Care Act. Yesterday, Healthcare.gov, the problem-plagued federal health insurance
marketplace, crashed
again. And a pile of news reports focused on
citizen anger over policy cancellations prompted by the law.

Last night, President
Obama addressed the situation. Passing
the act 2010 “was the easy part,” he said. Though he’s done campaigning for
office, Obama said, "I’ve got one more campaign in me – the campaign
to make sure that this law works for every single person in this country."

To get behind the
headlines, we reached out to a leading expert on the law: Kip Piper, who
advises large health care organizations on Medicare, Medicaid, and health
reform policy, finance and business strategy.

Among other roles, Piper
has worked as senior adviser to the administrator of the Centers for Medicare
and Medicaid Services (CMS), Wisconsin state health administrator, director of
the Wisconsin Medicaid program, a senior Medicare budget officer at the White
House Office of Management and Budget.

"The fact that ACA would effectively nuke most of the
existing commercial individual health insurance market was never in
question," Piper told us.

In the interview below, which was edited for length and
clarity, Piper discusses cancellations, the apparent surge in Medicaid
enrollments under Obamacare and whether more
transparency would have helped the rollout.

Q. What’s your take on the
coverage cancellations arriving in mailboxes around the country?

A. It was always
known that the ACA would outlaw millions of existing individual or non-group
health insurance policies. From a policy wonk perspective, that was a
no-brainer. It was self-evident in the law in March 2010 and confirmed in
subsequent rules and analyses. Also obvious all along was that consumers
would face a very different marketplace under the ACA, with some seeing lower
premiums (including me), some seeing larger premiums, and most everyone seeing
higher deductibles, higher co-pays, and a narrower choice of providers.

Quantifying the
impact of ACA on the individual — estimating the number of people
affected — was always tough. Whether it would cause 60 percent or
80 percent of individual plans to be cancelled was hard to estimate because
data on individual coverage is hard to come by, rules and products varied by
state, the ACA grandfathering rules came out slowly and in pieces, and even
things like the essential health benefit package varies a bit by state. Also,
not all these policies expire on December 31.

What’s frustrating is
how it took three and a half years, the failed launch of the federal exchange,
and the news media starting the question the administration’s core talking
points for anyone to focus on this. Whether you like or dislike the ACA
policies, the 19.4 million Americans in the various parts of individual market
deserved a heads up.

Q. Could this have been
prevented?

A. From a regulatory
perspective, health insurers in the individual market have no choice but to
discontinue non-compliant policies and, if they wish to keep business, offer
new, compliant policies. Health insurance is a binding contract.
Insurers can’t merely transfer people. They have to cancel policies that
no longer meet federal and state law, give notice, and then try to sell people
into the new one policies. Having said this, the new
policies will generally be more expensive. The ACA requires people to buy
a richer benefit package – it only permits sale of the richer benefit
packages. You can argue that this is better for society but there is no
free lunch and it does eliminate choices many consumers were fine with.

The higher cost
sharing – deductibles and co-payments – that many are seeing
(including me) is an inevitable byproduct of the ACA insurance market rules,
the brave new actuarial risks of the post-ACA marketplace, and competition
based on premiums and brand.

Q. Is Medicaid a success story
here?

A. Medicaid
enrollment data from the states with their own exchanges certainly suggests a
surge in Medicaid. It’s still early but it appears that the surge is a
combination of ACA Medicaid expansion and the woodwork effect – bringing
in individuals already eligible but not enrolled. Medicaid rolls will also
increase somewhat as individual commercial polices are cancelled, high-risk
pools end, and some small and mid-size employers drop coverage.

Today, Medicaid
covers about 74 million Americans. Given all the unknowns, including
economic conditions, projected Medicaid enrollment by 2020 ranges from 85
million to 102 million. Regardless, the role of Medicaid in the
marketplace and impact of Medicaid on federal and state budgets will only
grow.

Q. Should the contractors
behind healthcare.gov be penalized?

A. Determining
accountability for the healthcare.gov mess is very tricky. Both the CMS
and the multitude of contractors were responsible for the project, with a maze
of interdependencies. Parsing out responsibility for the many failed
parts of the federal systems for Obamacare will be
difficult, will take months, and an independent party such as GAO or the
Inspector General. Overall, it appears that there will be considerable
finger pointing in all directions, with plenty of blame to go around.

CMS made several
significant strategic blunders, most notably the decision to manage the project
in-house rather than hiring a systems integrator. Hiring a systems
integrator to honcho the project, serve as a super general contractor, make the
disparate pieces work together, and oversee testing and problem solving was
essential. CMS simply does not have the experience or capabilities to do
this in-house. Retaining an integrator would have been expensive,
probably at least $75 million on a project this size. Perhaps they didn’t
have the budget, but otherwise the decision to handle system integration
in-house is inexplicable and proved disastrous.

The Obama administration
decided to avoid making decisions during the 2012 election year. Given
the nature of elections and the array of winners and losers under the ACA
– most of whom still are unaware they are winners or losers – this
is perhaps understandable. However, CMS had no choice but to follow
orders and avoid making decisions or revealing information about the controversial
law during the election. That meant countless critical decisions that
should have been made in 2011 and 2012 were not made until well into 2013,
leaving little time for problem solving, system integration, and testing. To
this day, nearly 44 months since the law was signed, not all ACA-related
decisions have been made, with many less critical rules deferred.

In the end, whether
in the form of reasons or excuses, the contractors have plenty to point in
minimizing their share of responsibility. It appears they have covered
themselves with a paper trail of warnings to CMS.

Q. You’ve been particularly critical of the administration’s
transparency and follow-through on its own rules.

A. Presidential executive
orders have long required cost estimates and impact analyses for every major
proposed or final rule. In Executive Order 13563, President Obama
reiterated the longstanding requirement and further directed each federal
agency “… to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible.” A Regulatory Impact
Analysis (RIA) must be prepared for rules with economically significant effects
— anything with an impact of $100 million or more in any one year.
Obviously, every ACA rule had an impact of over $100 million.

However, early on CMS
stopped providing cost estimates for rules implementing the Affordable Care
Act. Most were omitted entirely, others watered down to be meaningless
statements the analytical equivalent of saying, “The hell if we know what will happen.”
They even started explicitly saying in ACA rules — including the massive
Medicaid expansion rule — that the rule didn’t have an impact of over
$100 million because, in effect, everybody expected it.

My understanding is
that CMS was directed by the White House Office of Management and Budget (OMB)
to stop publishing the cost estimates and impact analyses with the ACA
rules. They were concerned the information, coming from the CMS Office of
the Actuary, would be used as ammunition by the House and other critics of Obamacare. That is certainly true but no excuse for
ignoring 30 years of executive orders and the President’s own stated commitment
to open government.

38 comments

Great explanation Kip! So why didn’t this administration and/or congressional leaders explain the cancellations (aka constraints to implementing ACA) this way from the very beginning? Wouldn’t that be real transparency? You know make the American people part of the process!? I recently hired a painter to paint my house. The process was NOT he shows up, paints what ever color he pleases and charges me an astronomical amount for the service. Instead we talked about colors, any needed repairs, he quoted me a price and I shopped it around. There were no surprises. Now you’ve got millions of people feeling nervous and betrayed on both sides of the aisle. Yet no one is held responsible in grand, big government fashion. Terrible leadership!

It may be true that the ACA seems problematic, learning how to sell insurance, but don’t worry because I heard….

... that Obama has the often overlooked ‘back-up cast of doctors & psychiatrist’. Presently working for the CIA, State Dept., & the Military, this large staff of patriots all are supported by the American Medical Association.

If it “shouldn’t be a surprise” that millions of insurance policies people liked and wanted to keep were cancelled, why didn’t the dauntless investigative team at ProPublica expose the lie in 2010? If ProPublica knew in 2010 that the president’s claim that “if you like your policy you can keep your policy” was a lie, why did ProPublica not speak truth to power then?

Let me guess. When ProPublica carefully arranges the words “get behind the headline” following yet another rallying cry of “I’ve got one more campaign in me” those are marching orders. The orders are to “get behind the president” speaking through the headlines and fall in behind a leader making a promise that no agency considers realisitic—the lie that “the law works for every single person in this country.”

Officials recognize now and they recognized in 2010 that millions will remain uninsured. That’s why authors of the mandatory insurance act included a tax on those who don’t comply. If you say the law works for those people - who don’t consider high-priced insurance a value during the year-end signup period but who can only sign up for insurance three months out of the year— the lie is true, white is black and up is down.

If by “every single person” you mean the single people who earn under $25,000 a year and refuse to marry a partner who earns around $35,000 a year because they would lose their subsidy, yeh, the law works by making marriage a financially untenable decision. The law
“works” for those single people by giving them a reason to stay single.

But law doesn’t work for the jilted $35,000 a year earner who doesn’t make enough money to compete as a spouse with the deep pockets of the federal dole provided to “every single person” who stays single, keeps their income low and gets a subsidy.

This writer is another liar when it comes to Obamacare. In 2010 the HHS set forth very clear guidelines for plans to be “grandfathered.” To state that insurers “had no choice” is an outright lie and falsehood.

A no-brainer from a policy wonk’s perspective? Of course. It was a no-brainer from the perspective of anyone who has ever dealt with health insurance in the past. There has never been such thing as getting to keep the plan you like or getting to keep the doctor you like. Those who get insurance through an employer know that the choices available during enrollment often look different from year to year. The plans may change. And if they don’t, the premiums, co-pays and coverages usually do. Plans are cancelled and changed significantly all the time. Anyone and everyone should have known this. The failure here was on the part of the media. During the debates around the ACA Obama (and others) would regularly say that “you get to keep the insurance you have” line and the media parroted it.

Any reporter with a brain and the motivation should have challenged this in every article but none (or at least very few) did. I knew there was no way everyone was going to get to keep their existing coverage and I don’t know a damn thing about health care.

it’s a surprise because POTUS said “if you like your health plan, you can keep it. Period.” For even more emphasis, he said “No matter what.” And POTUS ridiculed the efforts of the GOP, conservative groups and Max Baucus to warn of an impending “train wreck”.

So outside-the-Beltway people who missed page 34,055 of the Federal Register are knaves and fools because they believed the plain spoken (and emphasized) words of POTUS???

That, my friend, is being out of touch with the lives of ordinary Americans. Adn excusing POTUS’s willful deception.

What’s really foul about all of this is the statements around the administration stopping making all decisions during an election year, thereby working to keep any bad press down. So we had a pack of bureaucrats - non-political (allegedly) employees that just let every problem just sit there and marinate as long as the checks kept clearing. I work in IT as a project manager implementing large systems in private companies. The longer a problem sits before being addressed or resolved, the more it costs to fix - exponentially so.

For all you Obama supporters, liberals, and Democrats - hell, Republican’s that went along with this or let your representatives go along with this - own it. It’s your fault. All of this. I rallied, wrote letters, campaigned and donated to get this repealed and these hacks out of office. My fingerprints aren’t on this trainwreck but darn sure all of yours are.

When an entire overhaul of health care is being rolled out with no one able to describe just what is in the legislation, you can set the stage for disaster. Congress turned itself into a rubber stamp and accepted platitudes instead of specific answers to every question along the way, and were too busy opposing each other to notice the mounting warning flags. The implementation is shameful, and the high deductibles were unexpected, adding stress for those who depend on insurance to help pay ongoing bills.

Sorry America, Benghazi was a pre-planned Al Queda attack the the Feds were warned about in advance, but did NOTHING the bolster security. For WEEKS Obama and Hillary were telling a wacko story about some youtube video being at fault. The Democrats LIED. Americans died.

Sorry America, The IRS WAS used to intimidate conservative groups with the blessing of King Obama. Democrats LIED.

Sorry America, the NSA is being used to spy on your every move, not just to track foreign terrorists. Democrats LIED.

Sorry America, Fast and Furious WAS a gunrunning operation disguised as a sting, in an effort to prove straw buyers were smuggling weapons to Mexican drug gangs. Democrats LIED. Americans died

When the president of the United States without reservation states if you like your health insurance and you like your doctor you can keep them I hardly think the old everyone knew…... you policy wonk types might have known but I too have been in this industry as a CPA for 30+ years and in my talks with insurance companies there was a very long period of time where simple amendments to existing policies was all that was thought would be needed to simply bring into existing policies the features that would make them “ACA approved”.

My old policy was very close to a bronze plan and would have only required an inclusion for mental health and a small reduction in the maximum out of pocket and I was good to go. I confirmed this with my insurance company a few months ago that was all that really needed to happen. I think the demand for re-writes was delayed and deferred hoping it would be missed by the public who is so in love with Obama that he can do anything to them and he can turn sh*t into shinola.

The president of the USA flat out lied to the American people about keeping your insurance and keeping your doctor if you wanted and he therefore lied about the $2,500 cost reduction in policies for the average American family.

Now we get lame brained excuses I wouldn’t let my grandchild or child get away with but the media lapdogs are still in their love affair mode with their socialist messiah.

Come NOV 2014 when the senate returns to republicans and they hold the house I suspect the media will abandon a sunk Obama ship and savage him for his lack of leadership….. six years too late.

Is not the ACA debacle the direct result of the Political World intruding into the free market. Not only does the Political Ethos not understand how the Market works but decisions made were made not based on what would make the product better but on Politics, that has different goals.
Government and their Political Masters overplayed their New Power that Forces People to buy a product of their design. Removed where all the free market forces that Capitalist need to play to, in order to attract new business in a Competitive market.

So - Obamacare costs $765 per month *MORE* for wasteful coverage… When I called the CA Exchange people and asked how I could find out exactly why my policy was cancelled and a worse Obamacare policy costs almost 300% more, I was told the biggest single contributor to the increase comes from the regulation that every policy be charged for and carry maternity coverage.. I mentioned that no one in our family can get pregnant… Silence.

Bottom line: We do not have the extra $765 per month ($9180 / year) to pay for Obamacare and we do not qualify to force other people to pay for our health insurance.

So, on January 1, 2014 my family will be without health insurance for the first time ever. My wife is frightened that when the tax-penalty-fee increases to unaffordable rates, the IRS will come for us. Given the aggressive and oppressive nature of our new government, I cannot in good conscience tell her she’s wrong.

And we are far from being the only victims of this corrupt-politician-caused disaster.

to DJ Markes something is wrong. the california site shows the various plans so for family of 3 the silver policy combined = $597/mo less subsidy if applic of $254 = Net family premium of $343. Add to that the expected out of pocket of $242 combined your grand total combined for 3 = $585 or if no subsidy = $827. btw the out of pocket had one person as very healthy, one as healthy and one was managing a chronic condition.

“What’s frustrating is how it took three and a half years, the failed launch of the federal exchange, and the news media starting the question the administration’s core talking points for anyone to focus on this. “

Especially the part about the news media!!! To say they lack basic curiosity would be a huge understatement. After all - who needs a news media that is interested in the largest change in the USA’s contemporary history?

In the lead-up years - virtually zero lamestream (thanks, Palin - I have to admit you DO sometimes have a way with words!) media stories about the extensive changes this ACA MIGHT HAVE on the lifescape of Americans. Only now that it’s here am I hearing and reading all the ways this affects the entire culture. So that’s on the news media’s lack of curiosity - which is the sign of a dullard, to put it in PC terms.

” You can argue that this is better for society but there is no free lunch and it does eliminate choices many consumers were fine with. “

I don’t understand this sentence. What is meant by ” but there is no free lunch AND….”?

From how I understand it, people who gamble with not having insurance and then have a “catastrophic” health event (like for example, I went to Stanford emergency room at 3 in the morning - nobody there at all -spent 2 hours in bed with an IV and they did one blood test, drove myself there and home and my bill was $10,000.) are going to cost the government so much more than the cost of an insurance plan, right? So we’ll be paying for you and your crappy plan because it’s our right to pay for you??

The story idea that the ACA breaks Mr. Obama’s promise to not cause insured to lose their policy coverage isn’t quite factual.

The law (unfortunately, not quoted correctly) says that existing policies MAY be grandfathered and the insured MAY keep them even if they don’t meet 100% of the ACA mandated requirements.

The law does NOT say the company can’t cancel a “substandard” plan at the end of the policy year. These are free market policies - the law does not require the company issuing these policies to continue to insure the individual who holds the policy once the policy expires.

There has historically been up to a 60% churn rate in the private market - people were cancelled for excessive claims, increasing age, new major conditions, or (just like automobiles) because the insurance company no longer felt like insuring people in the geographic area.

What the law does say is that if a company chooses to continue to offer a substandard policy, the subscriber is not being forced, by the Government, to give up the substandard policy. Exactly as before the new law, if you have insurance and it is overpriced or under-featured AND the company chooses to continue to offer the policy, you may continue to subscribe.

Some substandard policies may, in fact, be a better deal for some people than the new policy minimums mandated by the new law.

It is a subtle issue, maybe to subtle for an interview, but the new law does not mandate an insurance upgrade - in most cases, the insurance companies routinely cancel clients who have purchased low end policies and may have higher than average demand.

Peoples Policies where deemed substandard because they did not include benefits such as Maternity and Child Dental that people decided where not Germane to their circumstances.
This is the obvious result of Government giving to themselves a Power never before seen in America, the power to force people to buy a service they did not want.

The deceptions and poor execution of Obamacare are hardly the fault of Democrats alone, Republicans - even if through acts of omission - are also guilty. ACA is conceptually flawed for too many reasons already pointed out ad nauseum. When Americans get it through their heads that health care is not a PRODUCT on which profit can be made, perhaps we will have some civilized version of universal access to health care. The only thing that will get us there may very well be the total collapse of the profit-based health insurance business, not American sanity.

@ Tony
Your Belief that Health Care is not a product is why we find ourselves in the pickle with Obamacare. Chasing Profit has given us all the advancements in Research in Tech and Medicine over the last Hundred Years. Without Profit Doctors would still be Bleeding people and applying Leaches as a cure all to the sick. Without Profit Doctors would all to often give bad news to the Sick” I’m so sorry but there is nothing We can do to Help”.
Time to leave the World of the Hypothetical and Join us in the Real World We all Live In. Take Profit out of medicine and you freeze it at the level it is at , only then to back slide as those who administer the care seek Profit so they can continue putting Bread on their kitchen Table.

Higher charges for a better product is understandable, but the extent of the price raises are not. The insurance companies are doing what they always have done—gouge the public at every opportunity. This is NOT the fault of the ACA.

Isn’t it wonderful the self righteous deciding what should and should not be for profit in a society?

Why not have government control of food distribution so everybody gets the exact same amount of food to eat? Why not put all of us into government housing of the exact same type?

its been tried throughout human history with East Germany and the old Soviet Union completely failing.

Without profit, there is no innovation and without innovation you do not achieve longer lives.

Has anyone ever met someone who was one of the first to try radiation treatment years ago…. the burns and dead skin. Somebody had to make those sacrifices so that innovators could find a way to develop radiation equipment that is not so hard on the body. Same with chemotherapy… same with Xrays.

Anyone suggesting healthcare should not be a for profit sector is suggesting there should no profit in anything….. communism failed and while capitalism is flawed it does present opportunities for those who want to achieve great things to be rewarded with the possibility of achieving great wealth.

Now, Obama has created a taker nation. Has anyone noticed Obama NEVER uses the term “truly needy”. He just wants to build a dependency majority party that is re-elected on the promise that no one will ever earn a profit in healthcare again.

Hope all of you who go into the state alliances realize in a few years how limited your choices become and how much you are rationed because state alliances will equal glorified Medicaid. Then we will see if you really want to be seen by a doctor or treated with medications and equipment by an industry conscripted into donating its goods and services.

Guys, look, he said you can keep your plan if you like it. Have you ever met anybody who liked their insurance policy…?

Bruce, profit is fine. Profiteering is not, especially when the good or service is monopolized as it is by the AMA and the insurance cartel. They control the supply tightly, knowing demand can only rise unless people start dying.

If you want a free market solution, let’s start with not arresting people for “practicing medicine without a license” (especially when licensed physicians screw up) or breaking up the AMA’s ability to decide who can be a doctor and what he’s allowed to charge.

When there’s a monopoly, there ain’t much innovation, either. Take a look at your utilities, the cable companies, and music and movie industries…

I’d also point out that profit is no longer necessary for innovation. We live in a world where people post software and plans for drones online for free. I’d call OpenROV, household 3D printers, and Linux pretty darned innovative, myself, to pick just a handful of examples.

That’s the real problem with the ACA: It attacks the problem from the wrong direction. People can’t pay for health care without insurance? Well, then let’s make them buy insurance! That’s like saying that you’ll get beaten up unless you give the bully your lunch money, so we’ll just figure that into the cost of lunch. Stupid and actually more backwards than the existing system.

Obama didn’t say what he should have said. The fact is,
“The Affordable Health Plan does not throw you off your preset substandard insurance. If you want it, keep it” —- if the insurance company wishes to continue to provide substandard insurance to current clients, they MAY. If they want to cancel any current insurance including substandard insurance they may do that on the renewal date.

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